The Basics Of Stocks

Almost all financial advisors will tell you that you can never start too early when it comes to saving and investing. As it becomes easier and more accessible, investing in the stock market is now an option that everyone can take part of. Like all investments, it is important that you do your homework first and understand the risks and advantages that come with the stock market. Although it may seem easy enough, making sure you at least know the basics can help you prevent a monetary loss that you cannot afford. Here are some basic tips to make sure you are on the right track.

Financial Metrics

It’s important that you understand the definitions of the different metrics, such as ROE (return on equity), CAGR (compound annual growth rate), and EPS (earnings per share). They are calculated differently and the differences between them can be critical.

The Right Stock at the Right Time

It is very important that you know how “technical” and “fundamental” analysis are performed and how it plays into your stock market strategy.

Different Order Types

You should know the difference between the different types of market orders that are commonly used by investors, such as limit orders, stop limit orders and stop market orders.

Different Investment Accounts

Although cash accounts are the most commonly used, regulations require margin accounts for specific types of trades. You should know how it is calculated and the maintenance margin required.

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